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Xerox services federal loans made under the Federal Family Education Loan (FFEL) program along with private loans for banks like JPMorgan Chase.

The AG’s office originally launched an investigation into the company’s student loan practices in Dec. 2015, eventually finding the company failed to properly process student borrowers’ applications for federal loan relief associated with the Income-Based Repayment Plan.

The federal government created the program to allow borrowers of federal student loans the right to set their payments based on their income and family size. They were intended to provide relief to borrowers who face financial hardships or earn low wages.

The AG’s investigation found that by failing to properly process the applications for relief, ACS prevented students from obtaining needed relief, potentially requiring them to spend more on debts than needed. Additionally, this improper handing of applications likely contributed to borrowers paying excessive late fees.

“ACS failed to meet this standard and regularly undermined the opportunity for students to access appropriate repayment plans,” Healey said in a statement. “This conduct increases the already high cost of education, damages credit, and prevents students and their families from achieving long-term economic security.”

The AG’s office also found that ACS violated the state’s debt collection regulations by contacting students more than twice a week and did not investigate credit reporting disputes, which led to inaccurate information about students being sent to credit reporting agencies.

Under the recently announced settlement, Xerox must will pay a total of $2.4 million to the state. Bloomberg reports that about $400,000 of the settlement will go to about 800 Massachusetts borrowers who applied for relief but were unable to enroll.

The company has also agreed to stop abusive debt collection practices, reform the accounts of affected servicemembers, and credit any late fee overcharges.

Finally, Xerox will establish a “Borrower Advocacy Group” to provide direct assistance to student borrowers for income-based repayment plan applications and will administer a “Second Look Program” for applications that are rejected to ensure eligible students have every opportunity possible to qualify.

Xerox’s education servicing division has come under fire several times in recent years.

Last November, the company, which manages more than two million federally backed loans on behalf of big banks like Wells Fargo and JPMorgan Chase, notified the financial institutions that it was working with regulators on plans to address more than a decade of errors in its student loan servicing business, including some in which the company overcharged borrowers.

That investigation was first disclosed this week in a quarterly filing [PDF] from JPMorgan Chase, which detailed that the “Department of Education and the Consumer Financial Protection Bureau approved a remediation plan to address outstanding servicing issues.”

According to Chase’s 2015 third quarter filing, in December 2014, Xerox Education Services informed the bank that it had failed to properly make certain financial adjustments for some federally backed private student loan accounts it services.

Until 2013, Xerox Education Services held a contract with the Dept. of Education to manage about $140 billion in direct student loans. According to officials with the Department, the contract wasn’t renewed because of the company “improperly handled” the servicing of the loans.

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